PM Law Ltd & Motorplus Ltd & Ors

This is an application by the First Defendant (‘Motorplus’) for an order striking out certain paragraphs in the Particulars of Claim (paragraphs 36 to 48) served in these proceedings by the Claimant firm of solicitors (‘PM Law’), alternatively for an order striking out the claims made in those paragraphs as against Motorplus. This application is made under CPR 3.4(2)(a) and/or 3.4(2)(c). Motorplus also seeks summary judgment in respect of the claims set out in paragraphs 36 to 48, an application which is made under CPR 24.2.

The application is made in the context of proceedings brought by PM Law against not only Motorplus but also against the Third Defendant (‘Alpha’) and the Fourth Defendant (‘Ageas’), which are both insurance companies. Although Alpha and Ageas did not themselves make equivalent applications, it was explained in a skeleton argument submitted by Miss Josephine Higgs, counsel for Ageas, that Ageas supported Motorplus’s application. The same point was made by Alpha’s counsel, Mr Daniel Rogers, who attended the hearing essentially as an observer but who made it clear towards the end of the hearing that Alpha’s position was in line with that adopted by Ageas. I should explain that the Second Defendant (‘Equity Red Star’) obtained an order on 8 December 2015 dismissing PML Law’s claim against it, HHJ Waksman QC deciding that various extensions of time obtained by PM Law as regards service of the Claim Form on Equity Red Star should be set aside. Equity Red Star is, accordingly, no longer part of the action.

The substantive submissions were, in these circumstances, advanced by Mr Jonathan Hough QC on behalf of Motorplus and by Mr Richard Mawrey QC, leading Mr Nazeer Chowdhury, on behalf of PM Law. Before addressing those submissions, which went somewhat beyond the strict boundaries of the application (and paragraphs 36 to 48 of the Particulars of Claim) so as to cover an unpleaded restitution case, it is first necessary that I set out some background.

The background is not controversial. The controversy in this case lies, rather, in how the claims which have been advanced by PM Law have been put. In the circumstances, I can take much of what follows from the helpful summary set out in Mr Hough QC’s skeleton argument, a summary which itself is based on what is stated in a witness statement made by Ms Erica Gaddum, the partner at Eversheds LLP with conduct of this case on Motorplus’s behalf, on 12 November 2015. I shall, however, supplement Mr Hough QC’s summary, in particular with citation of certain contractual and other terms.

Motorplus is an insurance intermediary which markets and administers legal expenses insurance policies of both Before the Event (‘BTE’) and After the Event (‘ATE’) types. Motorplus does this as agent for various insurers. At the time that the referral arrangements with PM Law to which I refer in a moment were in place, the BTE and ATE policies provided by Motorplus were underwritten by three insurers: the BTE policies were underwritten by Equity Red Star until late 2008 or early 2009, when Ageas (previously known as Groupama Insurance Company Ltd) took over those policies, whereas the ATE policies were underwritten by Equity Red Star until early 2009, when Alpha took over those policies.

A typical BTE policy is one which covers the insured person against what might be labelled ‘own side’ and adverse (or opponent’s) costs of litigation in the event that an event occurs in the future and the insured person seeks to recover loss which is not insured under any other policy. An ATE policy is one which is issued after the event, typically in circumstances where the insureds enter into a conditional fee agreement (or ‘CFA’) with solicitors. The ATE policy will cover the risk of failing in the litigation and being liable for adverse costs and, in some cases, disbursements.

Relevant BTE policy provisions include, taking an Ageas policy by way of illustration, a scope of cover provision as follows:

“Subject to the terms, conditions, exclusions and limitations in this Policy, We will pay Legal Costs to a maximum of £50,000.00 in order to pursue a claim directly arising from one or more Insured Incidents, occurring within the Territorial Limits and during the Cover Period and provided that the premium has been paid, if We deem that there are reasonable prospects of success.

…

If an Appointed Lawyer is used, We will pay the Legal Costs for this.”

“Appointed Lawyer” is defined as:

“The solicitor, solicitors’ firm, barrister or other suitably qualified person appointed by us to act for you.”

“Legal Costs” is defined in this way:

“Professional fees which You are bound to pay, including reasonable fees or expenses incurred by the Appointed Lawyer whilst acting for You in the pursuit of a claim.”

As for the ATE policies, again by way of example, an Alpha policy includes the following terms:

“2 Insured section – Legal Expenses

Under this Section of Cover, the Underwriter shall provide an indemnity to the insured in respect of Opponents’ Legal Costs and Own Disbursements.”

“Disbursements” is defined as meaning:

“expenses paid by the appointed representative to the third parties that have been reasonably incurred on behalf of the insured in connection with the legal action … which are not the subject of any agreement where expenses are paid depending on the outcome of the legal action …”.

“Appointed representative” is defined as meaning:

“a firm of solicitors accepted by the Insurers which has been accepted by the insured to act for the insured in accordance with the terms of this policy”.

“Opponents costs” is defined as meaning:

“all costs, expenses and disbursements that have been reasonably incurred by the opponent in the legal action …”.

Between August 2006 and early 2011, Motorplus had arrangements with PM Law to refer people with potential civil claims to PM Law, including people who had BTE insurance and people who were not known to have such insurance. These arrangements provided for PM Law to make a referral payment for each person who was referred to the firm and whose case was accepted. This referral scheme was at first arranged by an exchange of emails. However, they were subsequently formalised with the parties’ entry into an agreement executed in June 2007 (the ‘Referral Agreement’). That agreement provides at Clause 1 as follows:

“In consideration of the payment of referral fees by PM Law Ltd Solicitors as set out in clause 4 of this Agreement Motorplus Ltd shall refer a quantity of road traffic accident, accident at work, public or private liability and product liability PI and Non PI claims for compensation (the ‘Referred Claims’) to PM Law Ltd Solicitors which PM Law Ltd Solicitors will handle on behalf of Motorplus injured customers (‘the Referred Customers’) in accordance with the terms of this Agreement and the terms of contracts to be entered into between the Referred Customers and PM Law Ltd Solicitors.”

Clause 7.2 is also of some relevance. This provides:

“Any agreement between Motorplus Ltd and a Referred Customer will provide that:

7.2.1

the independence of PM Law Ltd Solicitors professional advice will not be impaired by this Agreement.

7.2.2

the fact that the control of the Referred Customer PI claim will remain with PM Law Ltd Solicitors subject to the Referred Customers instruction.”

In making a referral, Motorplus would give PM Law details of the potential litigant. PM Law would then contact the person and confirm whether he or she had any BTE insurance (including any not known to Motorplus). If not, then PM Law would enter into a CFA with the person and issue an ATE policy. Referral payments for accepted cases would be invoiced on a monthly basis.

Taking one of the CFA wordings as an example, this contains the following wording:

“Paying us

If you win your claim, you pay our basic charges, our disbursements and a success fee. You are entitled to seek recovery from your opponent of part or all of our basic charges, our disbursements, a success fee and insurance premium as set out in the document ‘What you need to know about a CFA’.

…

If you lose you remain liable for the other sides [sic] costs and our disbursements. (You may be able to take out insurance to cover you for these risks)”.

What appears to be the accompanying “Client Care Pack Conditional Fee Agreement” document (a document referred to in paragraph 36(1) of the Particulars of Claim where it is described as being used for BTE and ATE policies), includes wording as follows:

“Our Legal Fees – What you might have to pay

You have instructed us to pursue this matter under a Conditional Fee Agreement referred to as a CFA. This means that we will only charge for the work we do if we win your case or in other limited circumstances.

If we win your case then the third party will pay the fees that you would otherwise be liable for. Since the third party only provide [sic] you with an indemnity for our costs we must advise you how our fees are calculated and what they might amount to.

…

So what will you actually pay?

…

You win your case – As explained above, if you win then under the terms of the CFA the fees which you would otherwise have to pay will be paid directly by the third party.

…

You lose your case – Losing means that we have advised you that we do not consider you have a reasonable chance of winning or the court has made an order against you. Under the terms of the CFA you do not have to pay our Profit Costs or VAT and our disbursements and the Defendant’s costs if proceedings have been issued, will all be covered by your Legal Fees Insurance Policy provided that you have not breached the terms & conditions of the policy.

…

Do you have to pay us anything whilst the case proceeds?

We aim to provide the best service possible to our clients. Under the terms of the CFA you do not have to pay us for any costs whilst the case proceeds.

Disbursements however usually become payable at the time that they are incurred or 30 days thereafter. We are pleased to advise you that we provide a disbursement funding facility to all our clients so that you do not need to pay for disbursements as the case proceeds.

We advise you what fees have been incurred but we will not expect payment unless one of the above 3 conditions applies. As above if your case is successful the third party will pay them, if your case fails we will claim them on your insurance policy. Therefore you will only have to send us any money if you instruct us not to continue or you fail to co-operate.

Insurance and why you need it

As we have discussed with you if you lose your case, and if you did not take out a Legal Fees Insurance Policy you would become liable to pay for the disbursements we incur on your case along with the costs incurred by the third party. If proceedings have been issued those costs are likely to amount to £4,000.00 - £5,000.00.

We therefore advise you to take out a policy of insurance that will cover you in the event you do become liable for these sums.”

What would seem to be the associated “What you need to know” document then includes the following:

“What do I pay if I win?

If you win your claim, you pay our basic charges, our disbursements and a success fee. The amount of these is not based on or limited by the damages. You can claim from your opponent part or all of our basic charges, our disbursements, a success fee and insurance premium.

…

If you win overall but on the way lose an interim hearing, you may be required to pay your opponent’s charges of that hearing.

…

What do I pay if I lose?

If you lose, you pay your opponent’s charges and disbursements. You may be able to take out an insurance policy against this risk. If you lose, you do not pay our charges but we may require you to pay our disbursements, again, you may be able to take out an insurance policy against this risk.

…

The Insurance Policy

In all the circumstances and on the information currently available to us, we believe that a contract of insurance with RLA Ltd is appropriate to cover your opponent’s charges and your disbursements in case you lose.

…

Dealing with costs if you win

-

You are liable to pay all our basic charges, our disbursements and success fee.

-

Normally, you can claim part or all of our basic charges, our disbursements, success fee and Insurance premium form your opponent.

-

If your opponent and we cannot agree the amount, the court will decide how much you can recover. If the amount agreed or allowed by the court does not cover all our basic charges and our disbursements, then you are liable for the difference.

…

If your opponent fails to pay

If your opponent does not pay any damages or charges owed to you, we have the right to take recovery action in your name to enforce a judgment, order or agreement. The charges of this action become part of the basic charges.”

Similarly, another of the CFA wordings provides:

“We, the solicitor, agree that we will only charge for our fees and expenses to the extent that they are recovered from the party found liable for your damages or otherwise insured, regardless of whether you win or lose your claim, provided that you fulfil your part of the Agreement and abide by the Terms & Conditions.”

The accompanying “Client Care Information Pack” then includes the following:

“Our Legal Fees – What you might have to pay

You have instructed us to pursue this matter under a Conditional Fee Agreement referred to as a CFA. This means that we will only charge for the work we do if we win your case and to the extent that they are recovered from the third party or a policy of insurance or in other limited circumstances asset out in the CFA Terms.

…

So what will you actually pay?

…

You win your case – As explained above, if you win then under the terms of the CFA the fees will be paid by the third party and we will not seek any balance from you. We will therefore present our bill to the third party and request payment of the same. In all the usual circumstances they will pay the same and you will receive your damages in full.

You lose your case – Losing means that we have advised you that we do not consider you have a reasonable chance of winning or the court has made an order against you. Under the terms of the CFA you do not have to pay our Profit Costs or VAT. Our disbursements and the Defendant’s costs if proceedings have been issued, will all be covered by your Legal Fees Insurance Policy provided that you have not breached the terms & conditions of the policy we will not seek any uninsured disbursements from you.

…

Do you have Legal Fees Insurance?

If your case has been referred to us by your Legal Fees Insurance provider then we already know that you have insurance which will cover your disbursements and opponents costs should you lose.

... .”

As for what would appear to be the associated “What you need to know about this CFA” document, which sets out the “Terms & Conditions” and which, as will appear, is quoted from in paragraph 37 of the Particulars of Claim where it is described as being PM Law’s “CFA for personal injury clients used for BTE Insurance”, this includes the following:

“2

Procedure

If your claim is successful, you will be paid damages by your opponent. The damages are the amount of money you will receive. After your damages have been awarded, we will seek to recover our fees, which will comprise our basic costs, disbursements made on your behalf, and a success fee.

…

4

Disbursements

These are our expenses and fees that have to be paid on your behalf, by us, to others involved in the case. For example, these may be court fees, barristers fees, expert’s fees, accident report fees, and official search fees

…

8

What happens if you win:

-

You are then liable to pay all our basic charges, disbursements and success fee to the extent they are assessed by the court and paid by your opponent or agreed with and paid by your opponent.

-

If you and your opponent cannot agree the amount, the Court will decide how much you can recover. If the amount agreed or allowed by the Court does not cover all our basic charges and disbursements, we will not seek the balance from you;

…

9

What Happens if you Lose

You do not have to pay any of the basic charges or success fee save to the extent that they are covered by insurance. You do have to pay:

-

Your opponent’s Legal charges and disbursements

-

Your Disbursements to the extent that they are covered by insurance;

If you are insured against payment of these amounts by your Insurance Policy, we will make a claim on your behalf. If you are not already insured against such risks we may, at any stage of your claim, recommend a policy of insurance against this risk to you. Where any claim we make for your disbursements under such a policy exceeds any indemnity provided, we agree to cap our claim for disbursements at a sum not exceeding the available indemnity.”

A further document, entitled “Client Care Pack Funded by Legal Expense Insurance” and, again as will appear, quoted from in paragraph 36(2) of the Particulars of Claim where it is described as being PM Law’s “Client Care Information Pack for Non CFA personal injury clients”, then includes:

“Our Legal Fees – What you might have to Pay

You have the benefit of Legal Expenses Insurance. This means that your insurer will pay our legal fees, VAT and disbursements in the event that we cannot recover the same from the third party. In addition, should you lose your case then they will also pay the third party any costs that they incur or the court orders you to pay.

This does not mean that you are not responsible for payment of these sums, just that your insurers are providing you with an indemnity with respect to the same.

…

Do you have to pay us anything whilst the case proceeds

You do not have to pay us anything whilst your case proceeds. We have agreed with your legal expense insurers that we will only submit a bill to them at the conclusion of the case.

In addition, as and when disbursements are incurred your Legal expense Insurers will discharge them.”

There was no issue (indeed, as I shall explain, Mr Mawrey QC placed much reliance on the fact) that, in practical terms: if the insured failed in his or her litigation, PM Law would submit details of the claim to Motorplus, so that Motorplus could check whether the claim was covered by the relevant insurance policy; and, if the claim was found to be valid, a payment would be made by Motorplus, as agent of the insurer concerned (Equity Red Star, Ageas or Alpha), with payments covering the insured’s own legal costs (incurred with PM Law) and disbursements often being made directly to PM Law and the insured’s liability for opponent’s costs sometimes being made directly to the opponent’s legal representatives.

After a number of years of the referral scheme working without apparent difficulty, from late 2009 onwards Motorplus began to have concerns about late payment of referral fees and ATE premiums and, indeed, in some cases, non-payment. A further concern developed after that. This was as to the proportion of referred cases which were being accepted by PM Law, and whether PM Law was under an obligation to pay referral fees based on a minimum proportion of accepted cases. This culminated in Motorplus telling PM Law, in January 2011, that no further referrals would be made. PM Law subsequently alleged that Motorplus had committed itself to making a minimum number of acceptable referrals each month and, as I explain below, the assertion of a lost profits claim that Motorplus had failed to refer sufficient cases to PM Law.

The claim was issued on 26 March 2014. In the first instance, only Motorplus was named as a defendant. However, in September 2014 Equity Red Star, Alpha and Ageas were added as further defendants, albeit that the proceedings were not at that stage served on them.

The case advanced in the Particulars of Claim comprises two distinct parts. The first claim, contained in paragraphs 9 to 35 of the Particulars of Claim, consists of a claim under the Referal Agreement and concerns the number of cases which Motorplus referred to PM Law. PM Law’s argument is that Motorplus was obliged to refer to PM Law at least 100 cases per month between 2006 and November 2009 and at least 200 cases per month in the period after November 2009. PM Law claims damages representing lost profits as a result of the referrals being below these levels. This claim, which amounts to £4,444,917.02, is not the subject of the present application; it is a claim which will, therefore, remain in being whatever my decision on the application.

That is not the position in relation to the claims which Mr Mawrey QC and Mr Chowdhury described in their skeleton argument, consistent with the description in the Particulars of Claim, as the ‘Coverholder Claims’. These are the claims set out in paragraphs 36 to 48 of the Particulars of Claim and, as such, the claims to which Motorplus’s application relates. Mr Mawrey QC and Mr Chowdhury described the claims in their skeleton argument as being “in essence, claims to recover from Motorplus, whether contractually or by way of restitutionary/contributory claim, moneys due to PML for disbursements and similar costs incurred in the course of handling the referred claims”.

As will appear, however, and as frankly acknowledged by Mr Mawrey QC during the course of his oral submissions, to the extent that the claim is put forward as a restitution claim, as opposed to as a contractual claim or as what Mr Mawrey QC and Mr Chowdhury described as a ‘derivative’ claim, this is not a claim which has yet been advanced in the Particulars of Claim, whether in paragraphs 36 to 48 or elsewhere in that statement of case. As such, although both Mr Mawrey QC and Mr Hough QC addressed me in relation to restitution at some length, their submissions on this subject had no bearing on paragraphs 36 to 48 of the Particulars of Claim and so on the application before me. Mr Mawrey QC and Mr Hough QC were nonetheless both keen that I should consider restitution in order that the parties can know what approach is likely to be adopted to any application by PM Law to amend the Particulars of Claim to introduce a restitution claim. Although without a draft amendment before me, my views on the topic must necessarily be regarded, in a sense, as provisional, given the parties’ joint position that it would assist were I to deal with the topic of restitution, I shall come on to do this later, after first addressing the claims which are the subject of paragraphs 36 to 48.

Returning, therefore, to those claims, namely the claims with which the application is concerned, these are put in three different ways: the first two ways as against Motorplus as well as Alpha and Ageas; and the third way as against Alpha and Ageas but not also as against Motorplus. In essence, PM Law seeks to recover sums which it says were due and payable under BTE and ATE policies issued in favour of its clients. The claim is said to include own side costs, adverse costs and disbursements; in total, the claim amounts to £3,046,991.13.

The first way in which the case is put is described in paragraphs 36 to 39. These paragraphs appear under a heading as follows:

“Insured Person’s appointment of the Claimant to recover from the Defendants disbursements and legal costs under the Before the Event Insurance (‘BTE Insurance’) and After the Event Insurance (‘ATE Insurance’) Personal injuries Client Care Information Pack and CFAs”.

Paragraphs 36 to 38 then refer to various documents of the sort to which I have myself previously referred, focusing on particular wording (albeit in the case of paragraph 36(2) the quote suggests that the second paragraph flows on from the first when it does not) which it is suggested supports the contention that PM Law was appointed to make recoveries:

“36

(1) By the Claimant’s Client Care Information Pack for CFA personal injury clients, used for BTE and ATE Insurance, the First Defendant’s clients (‘the Insured Person’) agreed with the Claimant that:

‘Our disbursements and the Defendant’s costs if proceedings have been issued, will all be covered by your Legal Fees Insurance Policy provided that you have not breached the terms & conditions of the policy we will not seek any uninsured disbursements from you …’ and

‘… if your case fails we will claim them [disbursements] on your insurance policy’.

(2)

By the Claimant’s Client Care Information Pack for Non CFA personal injury clients, used for BTE and ATE Insurance, the First Defendant’s clients (‘the Insured Person’) agreed with the Claimant that:

‘You have the benefit of Legal Expenses Insurance. This means that your insurer will pay our legal fees, VAT and disbursements in the event that we cannot recover the same from the third party. In addition, should you lose your case then they will also pay the third party any costs that they incur or the court orders you to pay.

You do not have to pay us anything whilst your case proceeds. We have agreed with your legal expense insurers that we will only submit a bill to them at the conclusion of the case.’

…

37

Under the Claimant’s CFA for personal injury clients used for BTE Insurance, the Insured Person agreed with the Claimant that:

‘You do not have to pay any of the basic charges or success fee save to the extent that they are covered by insurance. You do have to pay:

-

Your opponent’s Legal charges and disbursements

-

Your Disbursements to the extent that they are covered by insurance;

If you are insured against payment of these amounts by your Insurance Policy, we will make a claim on your behalf. If you are not already insured against such risks we may, at any stage of your claim, recommend a policy of insurance against this risk to you. Where any claim we make for your disbursements under such a policy exceeds any indemnity provided, we agree to cap our claim for disbursements at a sum not exceeding the available indemnity.’

38

Under the claimant’s CFA for personal injury clients used for ATE Insurance, the Insured Person agreed with the Claimant that:

‘If you lose you remain liable for the other sides costs and our disbursements. (You may be able to take out insurance cover you for these risks).’”

This is followed by paragraph 39:

“In the premises, the Insured Person appointed the Claimant to recover from the First Defendant or the Underwriters disbursements and basic charges under the legal expenses insurance policies entered into by the Insured Person.”

The second way in which the case is put by PM Law is set out in paragraphs 40 and 41 under a heading which states:

“The Claimant’s independent right to recover disbursements and legal costs from the Defendants under the contracts of appointment.”

Paragraphs 40 and 41 then state:

“40

Further or alternatively, the Defendants appointed the Claimant as an authorised or appointed representative under contracts of appointment, such contracts being derived from the Defendants’ appointment of the Claimant as an authorised or appointed representative and the Claimants subsequent dealing with the Insured person as the authorised or appointed representative.

41

Pursuant to the officious bystander test, alternatively the business efficacy test or otherwise in accordance with general market practice, it was an implied term of the contracts of appointment that the Underwriters or First Defendant on behalf of the Underwriters would pay the Claimant’s disbursements and/or legal fees in accordance with the legal expenses policy in the circumstances set out below at paragraph 48.”

Later, in paragraph 48 of the Particulars of Claim, the following is pleaded:

“In breach of the First Defendant’s duty and/or the Legal Expenses Insurance policies and/or the contracts of appointment, the Underwriters and/or the First Defendant has failed to discharge the Claimant’s valid claims and/or has failed to pay the following types of claim in accordance with the Legal expenses Insurance policies”.

There then follows a list of claim types, each with an accompanying reference to a schedule providing “full details”.

The third and final (at least as far as the Particulars of Claim are concerned) way in which the case is put by PM Law (at least in the Particulars of Claim) was set out in paragraphs 42 to 47 under the following heading:

“The Claimant’s independent right to recover disbursements and/or legal costs from the Third and Fourth Defendants under the Contracts (Rights of Third Parties) Act 1999”.

Paragraphs 42 to 47 went on to allege an entitlement on the part of PM Law to claim in its own name against Alpha and Ageas, citing certain policy wording covering adverse costs and own disbursements and other policy wording which covers ‘own side’ costs. PM Law’s case was that it is a member of a class identified in the wordings and, as such, is entitled to claim by virtue of Section 1 of the 1999 Act. I need not, however, take time up setting out the detail of this case because, during the course of the hearing, Mr Mawrey QC abandoned reliance on the 1999 Act. He explained that he did so because he recognised that it was not realistic for PM Law to seek to rely upon the 1999 Act in the light of the fact that many (albeit not all) of the BTE and CFA Policies contain wording which expressly excludes the operation of the 1999 Act.

This was, indeed, a realistic concession. It is appropriate not only because of the reason given by Mr Mawrey QC but also because, as Mr Hough QC pointed out in his skeleton argument, the policies neither expressly provide for PM Law to enforce their terms nor do they purport to confer a benefit on PM Law. On the contrary, the applicable insuring clauses confer a benefit, unsurprisingly and unexceptionally, on the insured person, namely PM Law’s client, not on parties (PM Law, the client’s opponent in the litigation or those to whom disbursements are payable) to whom the client has a relevant (costs or disbursement) liability. I agree with Mr Hough QC that it cannot be right, in these circumstances, to view the purpose of the insurance contract as being to benefit PM Law as their clients’ (the insureds’) solicitors. It is clear that the fact that this may be an incidental effect of the insurance being in place is not sufficient to warrant a conclusion that the 1999 Act is available to be prayed in aid by PM Law.

As Christopher Clarke J (as he then was) put it in Dolphin Maritime & Aviation Services Ltd v Sveriges Angfartygs Assurans Forening [2009] 2 Lloyd’s Rep 123 at [74]:

“A contract does not purport to confer a benefit on a third party simply because the position of that third party will be improved if the contract is performed. The reference in [section 1] to the term purporting to ‘confer’ a benefit seems to me to connote that the language used by the parties shows that one of the purposes of their bargain (rather than one of its incidental effects if performed) was to benefit the third party.”

In the previous two paragraphs, [72]-[73], Christopher Clarke J relied on The Prudential Assurance Company Limited v Ayres[2007] EWHC 775 (Ch), [2007] 3 All ER 946. In that case, in which the Court of Appeal reversed Lindsay J’s decision on a different ground ([2008] EWCA Civ 52), Lindsay J stated as follows at [28]:

“‘Express’ provision of a right to enforce is dealt with in s.1(1)(a) of the 1999 Act and what 'appears' from a proper construction is dealt with in s.1(2), so it might be thought that the verb 'purport' in 1(1)(b) is intended to deal with something that differs in some way from ‘express’ provision and from the ‘appearance’ of an intent. However, the first meaning given to the noun in the Oxford English Dictionary is:

‘That which is conveyed or expressed, esp. by a formal document; bearing, tenor, import, effect; meaning, substance, sense.’

The verb is defined as, inter alia, ‘to bear as its meaning; to express, set forth, state; to mean, imply’. It thus seems to me that s.1(1)(b) is satisfied if on a true construction of the term in question its sense has the effect of conferring a benefit on the third party in question. There is within s.1(1)(b) no requirement that the benefit on the third party shall be the predominant purpose or intent behind the term or that it denies the applicability of s.1(1)(b) if a benefit is conferred on someone other than the third party. The 1999 Act has no such additional requirement and Laemthong International Lines Company Limited v Abdullah Mohammed Fahem & Co, unreported, [2005] EWCA Civ 519, a decision of the Court of Appeal of May 5, 2005, illustrates that there is no such additional requirement.”

Furthermore, not only has the approach described by Christopher Clarke J in the Dolphin Maritime case has been followed in subsequent cases (see, e.g., San Evans Maritime Inc, Livanbros Maritime SA, Mrs Chariklia Livanou v Aigaion Insurance Co SA[2014] EWHC 163 (Comm), [2014] 2 Lloyd's Rep 265 at [39] per Teare J, and a recent decision of my own, The Royal Bank of Scotland PLC v McCarthy [2015] EWHC 3626 (QB) at [122]-[124] and [136]-[137]), but in the insurance context specifically the argument contained in paragraphs 42 to 47 of the Particulars of Claim has been dismissed in Colinvaux’s Law of Insurance (10^th ed.) at paragraph 9-087 in clear terms:

“[On] the other side of the line is the ordinary liability policy under which the insurers agree to indemnify the assured against any successful claim brought by a third party. Plainly, if the insurers adhere to their bargain, there will be a fund of money in the assured’s hands which can be used to make payment to the third party. However, it would be a misuse of language to call the third party an intended beneficiary of the policy; at best, he may derive benefit from it… [E]ven if the identification requirement was met – in the most extreme case, where the insurance protects the assured against claims by a named third party under a specific contract between the insured and the third party – that third party’s claim should still, in principle, fall outside the 1999 Act. The fact that the third party is identified in the policy does not make him an intended beneficiary.”

Mr Hough QC explained in his skeleton argument that the strike-out aspects of Motorplus’s application are made primarily under CPR 3.4(2)(a), on the basis that paragraphs 36 to 48 of the Particulars of Claim disclose no reasonable grounds, whether at all or insofar as the claims set out in those paragraphs relate to Motorplus. In the alternative, Motorplus relies upon CPR 3.4(2)(c), alleging a failure on the part of PM Law properly to particularise the contractual arrangements which are alleged in paragraph 40 of the Particulars of Claim.

Motorplus furthermore seeks summary judgment under CPR 24.2 on the basis that PM Law has no real prospect of succeeding with the claims set out in paragraphs 36 to 48. Mr Hough QC’s position was that this is the case for two reasons. First, he submitted that there is no real prospect of PM Law establishing what he describes as ‘title to sue’ in circumstances where PM Law was not a party to any of the BTE and ATE policies, whether originally or by virtue of an assignment from the insureds (PM Law’s clients) to PM Law. Secondly and in any event, Mr Hough QC submitted that there is no real prospect of PM Law being able to establish that Motorplus (as distinct from Alpha and Ageas, as insurers) is liable to pay any sums which may be due under the BTE and ATE policies, since Motorplus is not itself an insurer and, as such, is not a party to those contracts of insurance. Nor, Mr Hough QC submitted, is there any other compelling reason as why this part of the claim should go to trial. On the contrary, were it to do so, the parties would find themselves having to engage in a costly and document-heavy exercise involving, potentially at least, exploration of over 3,000 individual insurance claims.

Mr Mawrey QC and Mr Chowdhury did not agree with these submissions. Their position was that there are reasonable grounds for the claims contained in paragraphs 36 to 41 (but not now paragraphs 42 to 47, the 1999 Act claims) so as to make striking out inappropriate, and that those claims have real prospects of success so as to mean that summary judgment ought not to be granted in favour of Motorplus. They suggested that, in considering the position, PM Law’s claims “should be put in their factual context”. That context, they suggested in their skeleton argument, entails an understanding that:

“The essence of the arrangement is that the client’s primary point of contact is the claims handler. The handler chooses the solicitor and deals with the insurer. In the case of ATE insurance it is the handler who issues the policy or who is permitted by the insurer to authorise the solicitor to issue it. It is common ground in the current case that, in issuing the policy, the handler is the agent of the insurer and, if so authorised, the solicitor is a sub-agent. Consequently, irrespective of any other contractual terms agreed between the handler and the solicitor, in the cases where the solicitor issues the ATE policy, there is necessarily a relationship of principal and agent between the handler and the solicitor.”

Mr Mawrey QC and Mr Chowdhury went on to explain as follows in paragraphs 10 to 12 (again it is useful to set out their description in full as it is at the heart of Mr Mawrey QC’s and Mr Chowdhury’s submissions and these are not matters which have pleaded):

“10.

It is fundamental to the entire scheme and the common assumption of all parties to it that the client litigant will incur no personal liability for his own or (if unsuccessful) the other party’s costs (subject, of course, to any financial limit on the insurance policy or to any circumstances which would entitle the insurer to refuse indemnity). Unless and until the action is successful and some damages have been recovered, no money passes from or to the client himself. All disbursements and expenses made by the solicitor are made initially from the solicitor’s own resources and the solicitor looks solely to the insurance to recoup those in due course.

11.

The expectation in these cases is that the solicitor will be reimbursed directly: the money will not pass through the hands of the client. Where there is no intermediary, the insurer will pay the solicitor; where there is an intermediary, it is the intermediary who will pay the solicitor and to whom the solicitor will look for payment. In the standard case involving an intermediary claims handler (and the present action provides a textbook example) the solicitor will not need to know and frequently will not know the identity of the individual insurer for each client referred by the handler. The handler’s raison d’être is that he is sole point of contact for the insurer at one end and the solicitor at the other. He makes his money from his intermediary status.

12.

The crucial element in intermediary cases is that the intermediary acts as a coverholder: it is his obligation to obtain from the insurers sufficient money to discharge the insurer’s liabilities under the various BTE and ATE policies and to hold that money in a fund which will be used to make payments to the solicitors. The solicitors will deal exclusively with the intermediary: they will send their bills to him and expect him to pay those bills. Unless for some reason the intermediary ceases to exist, the solicitors will not look to the insurers for direct payment and, as has been said, they may be ignorant of the identity of any individual client’s insurer.”

It was Mr Mawrey QC’s and Mr Chowdhury’s submission that, in view of these considerations, it was no answer to PM Law’s claims for Mr Hough QC to submit, as he did, that since the BTE and ATE policies are contracts between PM Law’s clients (as insureds) and Alpha, Ageas and Equity Red Star (as insurers), and so not contracts to which PM Law is a party, there can be no claim as set out in paragraphs 36 to 41 of the Particulars of Claim, whether as against Motorplus (if either of the two submissions made by Mr Hough QC is right) or as against Alpha and Ageas (if the ‘title to sue’ submission is right). It was Mr Mawrey QC’s submission at the hearing that this is the case in relation to the first and second ways in which the case is put in the Particulars of Claim, in paragraphs 36 to 39 and paragraphs 40 to 41 respectively, even though he explained that, on reflection, the primary claim enjoyed by PM Law was neither of those two claims but was instead a claim in restitution which, to date, has not been pleaded. It was for this reason that much of the argument before me focused on a decision of Cooke J, Greene Wood McLean LLP (in Administration) v Templeton Insurance Ltd [2010] EWHC 2679 (Comm), in which a restitution claim against ATE insurers was successful. As I have indicated, in the circumstances, it is sensible that I consider this further issue, albeit that it is, and can be, no answer to Motorplus’s application, based as that application is on claims which have been pleaded rather than claims which have not yet been pleaded.

The principles applicable to summary judgment applications were common ground between Mr Hough QC and Mr Mawrey QC. I do not, therefore, need to do any more than set out, briefly, the following summary (which I take from Mr Hough QC’s skeleton argument): (i) the power to make summary determinations is a “very salutary” one which allows the Court to save costs and delay by resolving points early: see Swain v Hillman [2001] 1 All ER 91 at 92; the question for the Court is whether the respondent to the application has a real as opposed to fanciful prospect of success. The respondent’s argument must “carry some degree of conviction”: ED&F Man Liquid Products Ltd v Patel [2003] EWCA 472; a summary judgment application is not meant to be a substitute for a trial where one is justified (the Swain case at 95). However, “that does not mean that a court has to accept without analysis everything said by a party in his statements before a court” (the ED&F Man case at [10]); in particular, it may sometimes be “clear that there is no real substance in factual allegations made”; in determining the application, the Court is entitled to take into account further evidence which may realistically be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No 5) [2001] EWCA Civ 550 at [19]; however, a claim should not be allowed to proceed to trial based on a Micawberish speculation that something may turn up: ICI Chemicals & Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725 at [12]-[14].

As to the application to strike-out under CPR 3.4(2)(a), Mr Mawrey QC and Mr Chowdhury reminded me that it is important to approach the application on the basis that the facts alleged by PM Law are established. Otherwise, the following guidance in the Notes at 3.4.2 should be borne in mind:

“Statements of case which are suitable for striking out on ground (a) include those which raise an unwinnable case where continuance of the proceedings is without any possible benefit to the respondent and would waste resources on both sides (Harris v Bolt Burdon [2000] L.T.L., February 2, 2000, CA). A claim or defence may be struck out as not being a valid claim or defence as a matter of law (Price Meats Ltd v Barclays Bank Plc [2000] 2 All E.R. (Comm) 346, Ch D). However, it is not appropriate to strike out a claim in an area of developing jurisprudence, since, in such areas, decisions as to novel points of law should be based on actual findings of fact (Farah v British Airways , The Times, January 26, 2000, CA referring to Barrett v Enfield BC [1989] 3 W.L.R. 83, HL; [1999] 3 All E.R. 193). A statement of case is not suitable for striking out if it raises a serious live issue of fact which can only be properly determined by hearing oral evidence (Bridgeman v McAlpine-Brown January 19, 2000, unrep. CA). An application to strike out should not be granted unless the court is certain that the claim is bound to fail (Hughes v Colin Richards & Co [2004] EWCA Civ 266; [2004] P.N.L.R. 35, CA (relevant area of law subject to some uncertainty and developing, and it was highly desirable that the facts should be found so that any further development of the law should be on the basis of actual and not hypothetical facts)).”

With these principles in mind, I turn, in the first place, to consider the parties’ submissions in relation to the case as it is currently pleaded, in paragraphs 36 to 41 of the Particulars of Claim, coming on later to address the as yet unpleaded restitution case. There are a number of fundamental reasons why the current case is not sustainable and so “unwinnable” (as described in the Notes at 3.4.2), and why, therefore, I consider it appropriate to strike out paragraphs 36 to 41 and, to the extent that it really adds anything given that I have decided that the case should be struck out, give Motorplus summary judgment in relation to the case as advanced in those paragraphs, there clearly being no other compelling reason why the matter should go to trial.

I start by considering the first point which was made by Mr Hough QC, namely that PM Law does not have ‘title to sue’ because PM Law is not the insured under any of the BTE and ATE policies. I will then go on to address the second point made by Mr Hough QC, namely that Motorplus is, in any event, not liable under the BTE and ATE policies. As will appear, there is, however, a common fundamental difficulty with both of the ways in which PM Law puts its case. This is the fact that the BTE and ATE policies are contracts between PM Law’s clients (as insureds) and Alpha, Ageas and Equity Red Star (as insurers); they are not contracts to which either PM Law or Motorplus is a party.

That this is the contractual position is not, at least on the face of it, disputed by Mr Mawrey QC and Mr Chowdhury. Nor could it be in the light of the terms of the BTE and ATE policies with which I have been provided. Focusing for the moment on the ‘title to sue’ point, in all cases, quite unexceptionally, it is the insured (PM Law’s client) which the insurer agrees to indemnify. The reason why it is PM Law’s client is the party which is insured is that it is the client (not PM Law) which has the liability to pay the relevant costs, whether those are the client’s own costs, adverse costs or disbursements. As such, it is the insured (not PM Law) which needs, and is entitled to, the indemnity provided by the BTE and ATE policies. The situation is as Lord Dilhorne described it over forty years ago in Davies v Taylor (No. 2) [1974] AC 225 at page 230, albeit when dealing with a rather different argument:

“In this case the solicitors, no doubt first instructed by the insurance company, were the solicitors on the record as solicitors for the respondent. They acted for him and, in the absence of proof of an agreement between him and them or between them and the insurance company that he would not pay their costs, they could look to him for payment for the work done and his liability would not be excluded by the fact that the insurance company had itself agreed to pay their costs.”

Accordingly, the client is the party which is liable and the insurer indemnifies the client in respect of that liability; the solicitor has no liability of its own.

Although acknowledging that the BTE and ATE policies are contracts between PM Law’s clients (as insureds) and the insurers, Mr Mawrey QC and Mr Chowdhury went on nonetheless to suggest in paragraph 18 of their skeleton argument that the insurers were “not in truth agreeing to indemnify the client against liability to reimburse his solicitor”, and that the party (the only party) with an insurable interest is PM Law, not PM Law’s clients. I reject this suggestion for the reasons which I have just given and go on to address two specific arguments raised by Mr Mawrey QC and Mr Chowdhury.

The first basis on which PM Law argues that it can claim is that its clients (the insureds) appointed PM Law to recover sums payable under the BTE and ATE policies: the claim advanced in paragraphs 36 to 39 of the Particulars of Claim. I am quite clear, however, that this claim is misconceived. Quite simply, none of the documents relied upon by PM Law in paragraphs 36 to 38 supports the case which is put forward. On the contrary, they bear out that it is PM Law’s client (not PM Law) who is entitled to be indemnified in respect of costs. There is nothing to suggest that, in a significant departure from the normal position, PM Law should be able to do so instead. The ‘Client Care Information Pack’ cited in paragraph 36(1) amply demonstrates the point. I repeat the relevant wording but with emphasis in order to explain why I consider this to be the position:

“Our disbursements and the Defendant’s costs if proceedings have been issued, will all be covered by your Legal Fees Insurance Policy provided that you have not breached the terms & conditions of the policy we will not seek any uninsured disbursements from you …”.

It is clear that PM Law is here recognising that the relevant insurance policies are ones under which its client is the insured and, as such, the party with the entitlement to make a recovery. There is not the slightest hint that PM Law instead has the entitlement in its own right having been given that entitlement by its clients, and the position is not changed by the further wording relied upon:

“… if your case fails we will claim them [disbursements] on your insurance policy”.

Again, the reference to the insurance policy being that of PM Law’s client could not be clearer. It is impossible to read this as somehow reflecting an ability on PM Law’s behalf to recover disbursement costs in its own right. It is obvious that the wording is simply saying that PM Law would present an insurance claim on its client’s behalf. This does not mean that PM Law can itself, in its own name, make such a claim.

The same applies to the non-CFA ‘Client Care’ wording set out in paragraph 36(2). Again, with underlining by way of emphasis, I repeat the wording below:

“You have the benefit of Legal Expenses Insurance. This means that your insurer will pay our legal fees, VAT and disbursements in the event that we cannot recover the same from the third party. In addition, should you lose your case then they will also pay the third party any costs that they incur or the court orders you to pay.

You do not have to pay us anything whilst your case proceeds. We have agreed with your legal expense insurers that we will only submit a bill to them at the conclusion of the case.”

This is similarly consistent with the position being that PM Law would make a claim on its client’s behalf. There is no suggestion that PM Law would be able to sue in its own right.

The same, lastly, applies to the CFA wording in paragraph 37. In fact, that wording is even more explicit:

“You do not have to pay any of the basic charges or success fee save to the extent that they are covered by insurance. You do have to pay:

-

Your opponent’s Legal charges and disbursements

-

Your Disbursements to the extent that they are covered by insurance;

If you are insured against payment of these amounts by your Insurance Policy, we will make a claim on your behalf. If you are not already insured against such risks we may, at any stage of your claim, recommend a policy of insurance against this risk to you. Where any claim we make for your disbursements under such a policy exceeds any indemnity provided, we agree to cap our claim for disbursements at a sum not exceeding the available indemnity.”

The “on your behalf” wording is wholly inconsistent with the case now sought to be advanced by PM Law and wholly consistent with the position as Mr Hough QC described it.

I need not, in the circumstances, repeat the CFA wording also prayed in aid in paragraph 38. Suffice to say that it, once again, provides no support for PM Law’s case. It is quite clear that PM Law would act on its client’s behalf in bringing the client’s (the insured’s) claim under the BTE and ATE policies, not that PM Law would be able to bring a claim in its own name. This is not a case in which there is any allegation that the right to sue under the policies has been assigned to PM Law. This is not, therefore, a case such as that contemplated in Bowstead & Reynolds on Agency (20^th ed.) at paragraph 9-008:

“The question of the agent's right to sue certainly arises less frequently than that of his liability, and it seems that the incorporation of the agent into the contract has more normally the purpose of securing his liability. In any case, the right to sue can often be specifically assigned to the agent when this is thought desirable.”

The modern position is clear: an action brought by an agent ought to be brought in the principal’s name. As to this, paragraph 9-010 is instructive:

“A further group of old cases can be read as suggesting that the agent can in general sue on behalf of his disclosed principal and recover his principal's loss. They should be viewed with extreme caution. Many date from a time when there was no method of assigning legal choses in action, communications did not make it easy for foreign contracting parties to sue in England, contract rights under bills of lading were not transferable,and the central contractual doctrines now accepted had not been fully worked out. The distinction between a right of suit and a right to recover substantial damages was not taken in some of these early cases. However the matter would have been viewed at the time, it is submitted that most of them would not now be followed or would be otherwise explained. An action brought for another by an agent authorised to do so should nowadays be brought in the name of the principal.”

In the circumstances, the case as advanced in paragraphs 36 to 38 of the Particulars of Claim has no realistic prospects of success; it is, in truth, not a case which PM Law could ever win. It is no answer to Motorplus’s objections for it to be suggested that that it is PM Law which has suffered loss through not being paid fees and disbursements. This is because it is PM Law’s clients who are liable for PM Law’s costs, as well as for adverse costs and disbursements.

As to PM Law’s costs, clearly PM Law cannot be liable for its own costs; the liability must be of a third party, and that third party is PM Law’s client. As to adverse costs, it is again the client which has the liability since it is the client, not PM Law, which is the litigant and, as such, the party against whom any costs order will be made. The same applies in relation to disbursements: liability for these are incurred not by the solicitor but by the solicitor’s client. That this is the position is made clear in the various documents to which I have referred in paragraphs 11 to 17 above. A neat example is the wording of the document entitled “Client Care Pack Funded by Legal Expense Insurance” set out in paragraph 17 above, although this is just an example since the other documents are consistent on this point:

“Our Legal Fees – What you might have to Pay

You have the benefit of Legal Expenses Insurance. This means that your insurer will pay our legal fees, VAT and disbursements in the event that we cannot recover the same from the third party. In addition, should you lose your case then they will also pay the third party any costs that they incur or the court orders you to pay.

This does not mean that you are not responsible for payment of these sums, just that your insurers are providing you with an indemnity with respect to the same.”

This is the position albeit that the solicitor will typically be the party which makes payment of the disbursements. This is a matter of practicality rather than legality. Whilst typically a solicitor will make payment of disbursements to, for example, an expert, it does not follow that the solicitor does so in order to discharge a freestanding liability of the solicitor’s own. The solicitor simply pays on behalf of the client. There is, generally at least, no independent or freestanding liability on the part of a solicitor to pay disbursements. I agree with Mr Hough QC also that it is immaterial that, for reasons of convenience, Motorplus, as agent of the underwriting insurer, has in the past made claim payments directly to PM Law or to opponents’ solicitors or to third parties in respect of disbursements. This practice does not mean that the third party, whether that be PM Law, an opponent’s solicitor or a party to whom disbursements are payable such as an expert, acquires a direct right to sue the insurer. In all cases, the relevant liability is on the client, and it is that liability which is covered by the insurance policies under which, unless there is an assignment, the only party who can make a recovery is the client (as the insured).

The second way in which it is alleged that PM Law has ‘title to sue’ is the case which is set out in paragraphs 40 and 41 of the Particulars of Claim. These paragraphs contain the allegation that “contracts of appointment” were entered into between PM Law and Motorplus, Ageas and Alpha (paragraph 40 refers to “the Defendants” in the plural), “such contracts being derived from the Defendants’ appointment of the Claimant as an authorised or appointed representative and the Claimants subsequent dealing with the Insured person as the authorised or appointed representative”, andthat it was an implied term of each such contract that PM Law should be entitled to claim against each of Motorplus, Alpha and Ageas for any sums not paid under the BTE and ATE policies. There are a number of difficulties with this case.

First, there is a distinct vagueness as how the “contracts of appointment” came to be made and what they comprise. They are said to have arisen through a course of dealing and to have arisen out of the referral arrangements between PM Law and Motorplus. The point is made that PM Law could only deal with the insured litigants if it had been appointed as a representative. As Mr Hough QC acknowledged, it is true that Motorplus would select PM Law in the sense of referring potential clients to the firm. Indeed, some of the BTE and ATE policies describe the insured’s solicitors as the legal representative appointed by insurers. It does not follow from this, however, that this means that there was a “contract of appointment”.

Even if there were, PM Law would still need to establish the implied term which is alleged in paragraph 41, namely that Alpha and Ageas (as insurers) or Motorplus (on behalf of Alpha and Ageas as insurers) “would pay [PM Law’s] disbursements and/or legal fees in accordance with the legal expenses policy”. I agree with Mr Hough QC when he submitted that there is absolutely no basis upon which to imply such a term - a term entitling PM Law to sue in its own name for sums due under the BTE and ATE policies. There is simply no necessity to do so, applying the approach which has recently been explained by the Supreme Court in Marks and Spencer plc v BNP Paribas[2015] 3 WLR 1843. I have in mind, in particular, Lord Neuberger’s observations at paragraphs 17 to 21. I consider, specifically, that it is inconceivable that, if there were the “contracts of appointment” alleged, namely tripartite contracts involving PM Law, Motorplus and the insurers (Alpha and Ageas), notional reasonable people in the position of those parties at the time that the contracts were entered into would have intended that PM Law should be able to sue under its clients’ insurance policies. This would be fundamentally at odds with the fact that the BTE and ATE policies named the clients (not PM Law) as insureds. The clients were the parties who would incur the costs liabilities which would give rise to an entitlement to be indemnified under the policies. PM Law itself would incur no such liabilities. In addition, as Mr Hough QC pointed out, a number of the policy wordings contain terms providing that only the insurer and insured person could enforce policy terms and excluding the operation of the 1999 Act. Indeed, it was for this reason that Mr Mawrey QC did not pursue the case which entails reliance on the 1999 Act. I agree with Mr Hough QC that the implied term alleged would be wholly inconsistent with such provisions, making it all the more improbable that the suggested term should be implied as a matter of necessity.

My rejection of Mr Mawrey QC’s and Mr Chowdhury’s implied term submissions is supported by the conclusion reached by Cooke J in the Greene Wood McLean case. That was a case which arose out of claims brought against British Coal Corporation by miners. I do not need to get into the detail of those claims. What matters for present purposes is that this was a case in which there was a contract between Greene Wood Maclean LLP (‘GWM’), a firm of solicitors, and Templeton Insurance Ltd (‘Templeton’) under which Templeton agreed that GWM would be authorised to bind its clients to contracts of ATE insurance with Templeton. This, in circumstances where it was understood that GWM would give their clients what was described as a guarantee stating that, if the clients lost the case brought against British Coal Corporation, they would not have to pay anything.

GWM incurred a substantial liability to counsel for their fees pursuant to the CFAs which it had entered into with its clients, as backed by the ATE policies issued by Templeton. Counsel obtained a judgment against GWM for those fees and the judgment was satisfied by GWM. It was argued by GWM that, in the circumstances, a term was to be implied into its contract with Templeton that Templeton would honour its insurance obligations to GWM’s clients, the contention being that, because of the guarantee it had given to its clients, GWM had effectively agreed to guarantee Templeton’s performance of its obligations to the clients. Cooke J rejected this argument, specifically the argument that business necessity required the term to be implied, saying this at [34]:

“The arrangement which was put together by GWM for the provision of ATE insurance to its clients is no more and no less than one of the usual arrangements made by solicitors to obtain funding for an action by their clients, for whom they act under a CFA. It is commonplace for the solicitor to seek ATE insurance for the litigant who then enters into an insurance contract with the ATE insurer on the terms procured by the solicitor. The insurance policy contains the terms of the insurance and amounts to no more and no less than a contract between the insurer and the insured with the remedies available to each which arise from that. If the insurer fails to pay, the insured has his rights under the policy which he can pursue. There is no need for the solicitor to be able to sue in respect of a breach by the insurer. The insurer itself has remedies of avoidance in the event of non disclosure, misrepresentation or breach of warranty and the insured will have claims over against the solicitor if that is the result of a failure on his part. Equally, if the solicitor issues cover where he should not, contrary to the authorisation given, the insurer will have a claim against the solicitor. The structure of this arrangement is clear and requires no further term to be implied by which the insurer owes a duty to the solicitor to honour its policy obligations to the insured. The policy itself expressly provides in clause 11.2 that, subject to assignment with the insurers' prior agreement, the policy is to be for the exclusive benefit of the insured and that in no event should anyone other than the insured have any right of action under the policy.”

Mr Hough QC submitted, and I agree, that this analysis supports the analysis concerning implication of terms which I have just set out. Indeed, describing this at [37] as “the ordinary ATE insurance situation”, Cooke J went on to consider whether the fact that GWM had given its clients the guarantee to which I have referred changed things. His conclusion at [43] was this:

“In these circumstances I cannot see that it is a necessary concomitant of the GWM guarantee and Templeton's knowledge and approval of its terms that any obligation was undertaken by Templeton to GWM to honour the policy to indemnify the insureds under the terms of the policy. I do not consider that either Templeton or GWM would have had in mind the possibility of Templeton not honouring proper claims made under the policy at the time when the original arrangements were concluded and the agreement reached between GWM and Templeton that an ATE policy would be issued. There is nothing in Mr Edwards' evidence to suggest this and there is not the slightest hint of any discussion on the subject. GWM gave a guarantee, considering it was safe to do so because of the terms of the insurance policy, where the limit was considered adequate for the litigation envisaged. Whilst it doubtless relied upon the existence of the insurance in giving the guarantee, it did not limit its guarantee to the payment of the insurance indemnity but covered all eventualities for any Claimant Miner. GWM undertook to hold the Claimant Miners harmless in respect of any liability for adverse costs and disbursements in the event of their losing. The approval of this guarantee by Mr Maule and the authority given to GWM to bind the insurers, within the context of the agreement to provide insurance, does not necessitate the implication of an obligation of Templeton to GWM to honour the policy in favour of the insured Claimant Miner. Without such a term, the structure is workable with Templeton being bound to its insureds and GWM being bound to its clients in respect of adverse costs orders and Own Disbursements, but on differing terms. Both the insurance and the guarantee were issued in the full knowledge of the existence of the other and although it was doubtless expected that any Claimant Miner would claim on the insurance and the insurance would pay up, to the limit of the indemnity provided, the GWM guarantee operated across the board to cover the same items without indemnity limit and without reference to the terms of the policy.”

Therefore, even in a case where GWM had provided a guarantee, the implied term argument failed. The present case, where PM Law gave no guarantee, is a weaker case still.

In view of the decision which I have reached in relation to the ‘title to sue’ issue, I need not, strictly speaking, go on and consider Mr Hough QC’s submission that, in any event, even if PM Law has ‘title to sue’, there is no real prospect of PM Law successfully establishing that Motorplus (as distinct from Alpha and Ageas, as insurers) is liable to pay claims under the BTE and ATE policies. I deal with the matter for completeness, however, albeit, in the circumstances, relatively briefly. Obviously, the point does not arise in relation to Alpha and Ageas.

I am clear that on this aspect also the case advanced by PM Law has no prospect of success, not merely that it has no realistic prospect of success but that it is, indeed, an “unwinnable” case; in short, it is a case which is hopeless.

As far as concerns the case contained in paragraphs 36 to 38 of the Particulars of Claim, the reason is straightforward and has been mentioned previously: Motorplus is not an insurance company and is not itself a party to the BTE and ATE policies. Motorplus is the agent which marketed, provided and administered policies; there is nothing at all in the BTE and ATE policies to suggest that Motorplus has assumed an insurance, or any other, liability. Furthermore, as to the “contracts of appointment” case set out in paragraphs 40 and 41, even if there are such contracts and even if there was the implied term which has been suggested, the case against Motorplus goes nowhere in circumstances where the allegation in paragraph 41 is not that Motorplus is under a liability in its own right but that the relevant liability arises from an implied term “that the Underwriters or First Defendant on behalf of the Underwriters would pay the Claimant’s disbursements and/or legal fees in accordance with the legal expenses policy”. In other words, the liability to PM Law which is alleged is not that of Motorplus but that of Alpha and Ageas, with Motorplus making any associated payment merely “on behalf of” Alpha and Ageas.

It is primarily in this context that Mr Mawrey QC and Mr Chowdhury made the observations concerning Motorplus being an intermediary and the party which commonly would make payment to PM Law: see paragraphs 10 to 12 of their skeleton argument, to which reference is made in paragraph 34 above. These observations represent no answer to this aspect of the application since, as Mr Hough QC correctly submitted, the fact that an insurance agent administers policies and commonly pays claims does not make it personally and directly liable to make payments under policies. This is clear, for example, from Temple Legal Protection Ltd v QBE Insurance (Europe) Ltd [2009] Lloyd’s Rep IR 544, a case in which the Court of Appeal took the view that an underwriting agency holding a claims fund and with wide authority (as a coverholder) to handle and pay claims was nonetheless not acting on its own account in doing so but as the insurer’s agent, despite certain contractual language suggesting the contrary. As Moore-Bick LJ put it at [30] and [31]:

“It was common ground that the certificates of insurance evidenced contracts between QBE and the individual litigants created through the agency of the coverholders, but Mr. Butcher submitted that those contracts also created rights and obligations in Temple, in particular a right as well as an obligation to manage the insurance on a continuing basis. In order to sustain that argument Mr. Butcher was driven to submit that Temple became a party to the contract contained in the certificate, if only for some purposes. He therefore drew our attention to the definition in that document of the expression ‘Coverholder’ as the solicitor who has authority ‘under a Coverholder Agreement with Insurers to arrange the insurance on behalf of the Insured’ and to the definition of ‘Insurer’, to which I have already referred.

In my view, however, Temple was not a party to the contract of insurance for any purposes. It was not envisaged by the binder that it should be and, more importantly, the terms of the certificate make it quite clear that the insurer was QBE and no one else. Despite the fact that the definition of ‘Insurer’ was couched in less than straightforward terms, its meaning is clear enough and is reinforced by the reference to QBE in the clause dealing with complaints. The inappropriate use of the word ‘Insurer’ in some other parts of the document (for example, in the reference to a coverholder agreement ‘with Insurers’) is incapable in itself of supporting the conclusion that Temple was a party to the contract and none of the terms of the certificate require Temple to be a party to the contract in order to enable it to achieve its commercial object.”

In conclusion, therefore, I consider that for both the reasons given by Mr Hough QC, namely the ‘title to sue’ objection and the fact that, in any event, Motorplus cannot be under a liability, the allegations contained in paragraphs 36 to 48 of the Particulars of Claim are not sustainable. It follows that it is appropriate that these paragraphs are struck out and that there should be summary judgment in Motorplus’s favour. I repeat that there is no other compelling reason why there should not be such judgment.

In the circumstances, it is not necessary that I go on and determine Motorplus’s alternative strike-out application made under CPR 3.4(2)(c). I should, however, if only for completeness, address the matter, even though it inevitably entails an artificial exercise which requires that (contrary to what I have just decided) it is not appropriate to strike out or give summary judgment after considering the merits of the contentions made in paragraphs 36 to 41 of the Particulars of Claim on their merits.

Mr Hough QC submitted that this is a case in which there has been “a failure to comply with a rule, practice direction or order” and that, accordingly, the relevant paragraphs in relation to which there has been that failure should be struck out. He made two criticisms in this regard, both based on the pleading requirements set out in the Practice Direction (Statements of Case) to CPR 16, as follows:

“7.3

Where a claim is based upon a written agreement:

(1)

a copy of the contract or documents constituting the agreement should be attached to or served with the particulars of claim …

…

7.4

Where a claim is based upon an oral agreement, the particulars of claim should set out the contractual words used and state by whom, to whom, when and where they were spoken.

7.5

Where a claim is based upon an agreement by conduct, the particulars of claim must specify the conduct relied upon and state by whom, when and where the acts constituting the conduct were done.”

First, Mr Hough QC pointed to paragraphs 36 to 39 of the Particulars of Claim and the case that insureds under the BTE and ATE policies appointed PM Law to recover sums due under those policies, and to do so in PM Law’s own name rather than as the insured’s agent. He highlighted how the only particulars given concerning this case consist of references to certain passages in the various ‘Client Care’ documents. He pointed out that there is otherwise nothing provided, and that this amounts to non-compliance with the Practice Direction requirements set out above. The answer to this submission, in my judgment, is that the ‘Client Care’ documents are the documents upon which PM Law relies. Whether the documents support the case put forward is a different matter. I do not consider that they do for the reasons which I have given since the documents simply contemplate that PM Law will act on the insureds’ (their clients’) behalf in endeavouring to make reinsurance recoveries. This is, however, a substantive point whereas CPR 3.2(4)(c) is concerned with procedural compliance. In terms of compliance with Practice Direction 16, I consider that there has been no relevant (procedural) failure. Accordingly, I do not consider it appropriate to make an order under CPR 3.4(2)(c) in this respect.

As to the second way in which Mr Hough QC put this aspect of the application before me, this concerns paragraphs 40 and 41 of the Particulars of Claim: the case that PM Law entered into “contracts of appointment” with Motorplus. Here, it seems to me that there is more force in Mr Hough QC’s complaint that the necessary particulars of any written agreement, oral agreement or agreement by conduct have not been provided and that this represents non-compliance with Practice Direction 16. Nonetheless, since CPR 3.4(2)(c) still requires the exercise of a discretion, had I not arrived at the decision which I have done as regards the merits of the claims to which the primary application relates, I would not at this stage have struck out paragraphs 40 and 41. This is because it seems to me that the right course would instead have been to require further particularisation to be provided, and then to have re-visited the position after further particularisation had been given.

As I have mentioned, at the heart of Mr Mawrey QC’s and Mr Chowdhury’s submissions was the Greene Wood McLean case. It was their position that this authority represented something of a sea change since it enables a party in PM Law’s position to advance a restitution claim in circumstances such as the present. Specifically, it was Mr Mawrey QC’s and Mr Chowdhury’s position that the decision gives PM Law the ability to be reimbursed in respect of disbursements paid to third parties and to do so not only from PM Law’s clients’ insurers, Alpha and Ageas, but also from Motorplus even though Motorplus is not one of PM Law’s clients’ insurers.

The proposition advanced on PM Law’s behalf boils down to this: that disbursements paid by PM Law “pursuant”, as it was put in Mr Mawrey QC’s and Mr Chowdhury’s skeleton argument (which, in the absence of a draft amended statement of case, is the most convenient place to see how the case is formulated), “to its legal obligations as the client’s solicitor” are recoverable in restitution from Alpha, Ageas and Motorplus because those disbursements are “also sums which the insurers and the intermediary were and are bound to provide reimbursement pursuant to the insurance arrangements”. It was, furthermore, submitted that whether the right to reimbursement is “technically that of the client or that of the solicitor is irrelevant for this purpose because it is common ground that none of the three other parties has any legal right to recover those sums directly from the client”.

I have already explained that, in the Greene Wood McLean case, Cooke J first rejected an implied term case which was advanced by GWM. This is the context within which he went on to address GWM’s alternative restitution argument. This was summarised at [52]:

“In his closing submissions, Mr Ronald Walker QC, on behalf of GWM, developed another line of argument in which he submitted that GWM was entitled to recover from Templeton by operation of a general well established principle of law, based on a line of authority stretching back to the 19^th Century. The principle, as stated by him, was that where a person discharges the indebtedness of another at his request or because he is obliged to do so, he has a claim to be indemnified by that other person.”

As to this, Cooke J decided as follows:

“62

Whilst therefore there was no implied term in the contract between GWM and Templeton that Templeton would honour the policy, it was clearly understood between GWM and Templeton that if the situation arose where adverse costs or Own Disbursements became payable by the Claimant Miners, so that both Templeton and GWM were liable under their respective contracts with the Claimant Miners, the primary liability to them lay with Templeton.

63

The decision of the Court of Appeal in Brook's Wharf and Bull Wharf Ltd v Goodman Brothers [1937] 1 KB 534 is very much in point here. Lord Wright MR, in determining a claim by a warehouseman who had discharged the customs duties on goods belonging to the owners said this:-

‘The essence of the rule is that there is a liability for the same debt resting on the plaintiff and the defendant and the plaintiff has been legally compelled to pay, but the defendant gets the benefit of the payment, because his debt is discharged either entirely or pro tanto, whereas the defendant is primarily liable to pay as between himself and the plaintiff. The case is analogous to that of a payment by a surety which has the effect of discharging the principal's debt and which, therefore, gives a right of indemnity against the principal.”

64

He went on to say:-

‘The obligation is imposed by the Court simply under the circumstances of the case and on what the Court decides is just and reasonable, having regard to the relationship of the parties. It is a debt or obligation constituted by the act of the law, apart from any consent or intention of the parties or any privity of contract.

It is true that in the present case there was a contract of bailment between the plaintiffs and the defendants, but there is no suggestion that the obligation in question had ever been contemplated as between them or that they had ever thought about it. The Court cannot say what they would have agreed if they had considered the matter when the goods were warehoused. All the Court can say is what they ought as just and reasonable men to have decided as between themselves. The defendants would be unjustly benefited at the cost of the plaintiffs if the latter, who had received no extra consideration and made no express bargain, should be left out of pocket by having to discharge what was the defendants’ debt.’

65

Thus the principles set out by Cockburn CJ in Moule v Garrett at page 104 come into play and apply here so that GWM can recover from Templeton the amount which it paid for which Templeton was primarily liable under the ATE policy, up to the policy limit, less sums paid under the policy:-

‘The general proposition applicable to such a case as the present is, that where one person is compelled to pay the damages by the legal default of another, he is entitled to recover from the person by whose default the damage was occasioned, the sum so paid. .. Where the plaintiff has been compelled by law to pay or, being compellable by law, has paid money which the defendant was ultimately liable to pay, so that the latter obtains the benefit of the payment by the discharge of liability: under such circumstances the defendant is held indebted to the plaintiff in the amount. Whether the liability is put on the ground of an implied contract or of an obligation imposed by law, is a matter of indifference: it is such a duty as the law will enforce.’”

Although, as I say, Mr Mawrey QC and Mr Chowdhury submitted that the Greene Wood McLean case enables PM Law to make good a restitution claim against Motorplus in the present proceedings, they nonetheless acknowledged, at least Mr Mawrey QC did in the course of his oral submissions, that realistically the only sums which can be recovered in restitution, if there is a good restitution claim at all, are amounts paid by PM Law by way of disbursements. As Mr Mawrey QC put it, the other types of costs (own party and adverse costs) “present more difficulty”. He essentially accepted that Mr Hough QC was right that PM Law can hardly suggest that it is liable to itself to pay its own fees. He also essentially accepted that PM Law cannot be liable in respect of adverse costs, as the relevant liability will be that of PM Law’s clients in their capacity as parties to the proceedings in relation to which applicable costs orders have been made. Accordingly, in both cases PM Law cannot establish that such costs, if paid by PM Law, were paid because PM Law (as opposed to PM Law’s clients) were liable to make the payments.

In truth, however, there is no claim in restitution in relation to any costs, including disbursements. I do not accept that Mr Mawrey QC and Mr Chowdhury were right when they suggested that there is an analogy between the present case and the Greene Wood McLean case. The cases are very different. Importantly, in the Greene Wood McLean case Templeton (the insurer) owed GWM’s clients obligations to pay as insurer and so also did GWM by virtue of the guarantee which GWM had given those clients. It was, therefore, a case where both Templeton and GWM were, as Cooke J pointed out at [62], both “liable under their respective contracts with the Claimant Miners”, the “primary liability”, indeed, lying with Templeton rather than with GWM. In contrast, in the present case there is no equivalent of the guarantee given by GWM to its clients: PM Law did not guarantee to its clients that Alpha or Ageas or, for that matter, Motorplus would pay under the BTE and ATE policies, and that it (PM Law) would pay if Alpha, Ageas or Motorplus did not pay. Nor were Mr Mawrey QC and Mr Chowdhury able to point to any other contractual commitment made by PM Law to its clients that PM Law would pay disbursements. On the contrary, the various documents to which I have referred in paragraphs 11 to 17 above show that it was PM Law’s clients, not PM Law, who were liable to pay disbursements. Nowhere is there any suggestion that PM Law would be the party which would have that liability. This, of course, reflects the general position.

It follows from this that this is not a case where PM Law can realistically point to an obligation owed by it to its clients to pay the disbursements which it maintains it is entitled to recover by way of a claim in restitution. It further follows that, unlike the Greene Wood McLean case, this is not a case where both PM Law and Alpha, Ageas or Motorplus were under a liability as regards the payment of disbursements to PM Law’s clients. This means that the present case does not bring into play the principle stated by Lord Wright MR in Brook’s Wharf and Bull Wharf Ltd v Goodman Brothers [1937] 1 KB 534. This is not a case where “there is a liability for the same debt resting on the plaintiff and the plaintiff has been legally compelled to pay”. Nor is this a case in which, having regard to the statement of the principle by Cockburn CJ in Moule v Garrett (1872) LR 7 Ex 101 at page 104, it can realistically be suggested that PM Law “has been compelled by law to pay or, being compellable to pay, has paid money which the defendant was ultimately liable to pay”. It cannot even be said in the present case that PM Law was under a liability to disbursement recipients to make the payments because, at least in the absence of evidence showing that PM Law (as opposed to its clients) assumed such liabilities, PM Law was under no such liability.

The fact that PM Law was under no relevant liability in relation to disbursements makes the restitution claim impossible. That is the position in relation to both insurers, Alpha and Ageas, and Motorplus. As regards Motorplus, however, there is a further reason why the restitution claim is not viable. This is that Motorplus was itself under no liability to make any disbursement-related payments to PM Law’s clients. Motorplus is not a party to the BTE and ATE policies, and so assumed no relevant liability in respect of disbursements. Nor is Motorplus otherwise liable; indeed, even on the basis of the case as it is put in paragraphs 40 and 41 of the Particulars of Claim, it is not alleged by PM Law that Motorplus is itself, as opposed to as an agent, under such a liability. It cannot, therefore, be said as regards Motorplus that Motorplus (as opposed to Alpha and Ageas) was under a liability, whether to PM Law’s clients or to any third party entitled to be paid disbursements having carried out work for PM Law’s clients. There can, therefore, be no common liability of the sort to which Cooke J referred in the Greene Wood McLean case at [62]. Accordingly, even if PM Law was under a relevant legal compulsion, it is nonetheless not the case that Motorplus has benefitted from any disbursement payments made by PM Law. In short, this case is far removed from the Greene Wood McLean case; that was clearly an exceptional case. As such, it provides no basis for the (as yet unpleaded) restitution case which Mr Mawrey QC and Mr Chowdhury seek to advance in response to Motorplus’s strike-out and summary judgment applications.

In conclusion, therefore, I order as follows: (i) that paragraphs 36 to 48 of the Particulars of Claim be struck out; and (ii) that there be summary judgment in favour of Motorplus in respect of the claims brought against Motorplus by PM Law as set out in those paragraphs.

It follows from (i) that the claims brought by PM Law against Alpha and Ageas will also come to an end. Although I do not order summary judgment in respect of those claims, since neither Alpha nor Ageas has made an application of its own, nonetheless as I have decided that paragraphs 36 to 48 of the Particulars of Claim should be struck out the allegations made against Alpha and Ageas in those paragraphs necessarily fall away. This follows, specifically, from the fact that I have decided that PM Law has no ‘title to sue’, the first of the arguments advanced by Mr Hough QC. The position would have been different had I rejected the ‘title to sue’ submission and decided in favour of Motorplus solely on the basis of Mr Hough QC’s further argument that Motorplus (as a party which is not an insurer) has no liability to PM Law. That is not, however, what I have decided.